The worst of the shock to oil markets and economies stemming from the COVID-19 pandemic is already behind us, the top executive of one of the largest commercial banks in Qatar told Bloomberg TV in an interview on Wednesday as the Middle East countries are reeling from the double shock of the coronavirus and oil price collapse on their economies.
"We look forward to reset the button as and when the world reaches normalcy," Raghavan Seetharaman, chief executive officer at Doha Bank QPSC, told Bloomberg TV.
At the end of last month, Amin Nasser, president and CEO of the world's biggest oil company, Saudi Aramco, said that the worst in the oil market was over, adding that he as "very optimistic" for the second half of this year.
Despite the optimism that things can't be as bad as they were back in April, the banks in the Middle East have felt the double whammy of COVID-19 and low oil prices on their portfolios and provisions to cover bad loans.
First Abu Dhabi Bank took a net impairment charge of US$288 million (1.06 billion UAE dirhams) in the second quarter, more than double the provisions for bad loans for the same period of 2019, while Emirates NBD more than tripled its net impairment loss on financial assets in the first half of 2020 compared to H1 2019.
In Qatar, despite timely support from the central bank, the credit profiles of Qatari banks are likely to weaken in 2020 as a result of the coronavirus crisis and lower oil prices, Fitch Ratings said earlier this week.
The crash in oil prices has already sparked a wave of mergers and acquisitions in the banking sector across the Middle East, with lenders in Saudi Arabia, Qatar, the UAE, Kuwait, and Oman considering tie-ups.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
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